The ‘Elle’ advantage

Gender inequality is making itself felt, but only this time, it's the male who's at the receiving end. Women can buy cheaper life insurance than their male counterparts.

However, this is not because insurance agents around the globe have a softer corner for women, but that it follows a fair recognition of objective risk. On an average, women outlive men by at least 1 or 2 years. So, if you think that there should be some monetary benefit arising out of this, for once the insurance companies won't disagree.

Based on average longevity statistics, it turns out that since women live longer than men, their average premiums would work out lesser. This is of course true, if you compare healthy persons of the different genders. Additionally, several international research studies reveal that men make claims more frequently than women, that these claims are larger on an average, and that accident insurers settle a greater number of male claims.

Hence, they pay higher premiums than women. And since women live longer, they tend to get a lesser annuity compared with men, as the annuities to women would be paid over a longer period.

All companies accept lesser rates for women than for men. Say for example, a leading private sector insurance company offers a 30-year-old male a term insurance policy for Rs 3,780 pa (SA 10 lakh; term 30 years) it would offer the same to a woman with similar criterion for Rs 3329, a difference of Rs 451 per year.

The difference after applying service tax would be even greater. Drawing out further examples from different companies will also invariably lead to the same conclusion. But one must remember that this is true only if the two individuals are equally healthy. If the woman suffers from some medical condition, then her premium is likely to be loaded and she might pay a higher premium compared to her male counterpart.

Even unit-linked policies are no exception to this rule. The only difference is that in unit-linked policies, the mortality charge that is deducted from the premium is lower for women for the same sum assured. Thus, ceterus paribus, a woman would benefit from greater allocation.

For instance, if say for X Co Ltd's unit-linked insurance policy, the mortality charge for a male of 40 years is Rs 2.15 per thousand of SA, for a similarly aged woman, it could be Rs 1.88 per thousand SA. So in effect, since investments are made after deducting mortality and other charges, the amount of investments made on behalf of a female customer tend to be higher than that of a male.

Investors should check for such details in their insurance polices and see the extent of difference that they would encounter. But the rules are a little different for pensions or annuities. There are two parts to a pension policy. One is the deferment period and the other is the annuity period. Premiums are paid in the deferment period and the corpus is built.

Here, the regular statistics are applied and premiums for women are lower than that of men. At the end of the deferment period, you as the policyholder can start receiving your annuity. Now annuities are paid every year from the corpus for the rest of your life.

Since women live longer, they would receive a lesser annuity per annum as compared with them. Hence the rate of annuity for them would be lower. So don't be surprised if you and your hubby started off with a retirement plan at the same time as you and ends up with a higher annuity.

What this also means is that you will have to consider these factors and undertake your planning accordingly. The insurance company is not making you pay for the lower premiums that you paid earlier. Instead, it is just a bunch of statisticians feeling happy with their job.